Fidelity National Financial, Inc.
) announced the formation of its wholly owned subsidiary Black
Knight Financial Services, Inc. (Black Knight) by restructuring
its recently acquired Lender Processing Services, Inc. (LPS).
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On Jan 2, 2013, the company completed its much-awaited buyout of
Lender Processing Services Inc. for $37.14 per share. The cash
component in the consideration was $28.10 per share while the
remaining $9.04 was in Fidelity National shares.
Black Knight will have two operating subsidiaries - ServiceLink
Holdings, LLC (ServiceLink) and Black Knight Financial Services,
LLC (BKFS). Fidelity National will retain 65% stake in each
of the subsidiaries, issuing the remaining 35% to funds
affiliated with Thomas H. Lee Partners, L.P. and certain related
Hence, Fidelity National Title Group, Inc. and Black Knight will
become Fidelity National's core operating subsidiaries.
Following the restructuring, Black Knight, via ServiceLink and
BKFS, will own and operate LPS businesses and Fidelity National's
BKFS includes LPS' former technology, data, analytics businesses
as well as the technology offerings that were previously owned by
Fidelity National's ServiceLink division.
On the other hand, ServiceLink includes LPS' former business of
transaction services and Fidelity National's former ServiceLink
division. It offers a wide range of origination and
default-related products and services to the major national and
regional mortgage originators.
The restructuring is expected to fuel organic growth for Fidelity
National and is also expected to create new investment
opportunities for the company to grow its core business.
The company has solid track record of delivering positive
earnings surprises over the last eight quarters with an average
beat of 11.8%. We expect this momentum to continue when the
company reports its fourth-quarter 2013 results. This is because
our proven model shows that Fidelity National has a perfect
combination of a Zacks Rank #1 (Strong Buy) and a positive
Other players worth considering in the property and casualty
insurance space include
Allied World Assurance Company Holdings, AG
AmTrust Financial Services, Inc.
HCI Group, Inc.
). All these stocks carry the same Zacks Rank as Fidelity